Correlation Between Tien Giang and Pha Lai

Can any of the company-specific risk be diversified away by investing in both Tien Giang and Pha Lai at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tien Giang and Pha Lai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tien Giang Investment and Pha Lai Thermal, you can compare the effects of market volatilities on Tien Giang and Pha Lai and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tien Giang with a short position of Pha Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tien Giang and Pha Lai.

Diversification Opportunities for Tien Giang and Pha Lai

0.16

Correlation Coefficient

Tien Giang  Pha Lai

Average diversification

The 3 months correlation between Tien and Pha is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Tien Giang Investment and Pha Lai Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Lai Thermal and Tien Giang is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tien Giang Investment are associated (or correlated) with Pha Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Lai Thermal has no effect on the direction of Tien Giang i.e., Tien Giang and Pha Lai go up and down completely randomly.

Pair Corralation between Tien Giang and Pha Lai

Assuming the 90 days trading horizon Tien Giang Investment is expected to generate 0.74 times more return on investment than Pha Lai. However, Tien Giang Investment is 1.34 times less risky than Pha Lai. It trades about 0.07 of its potential returns per unit of risk. Pha Lai Thermal is currently generating about 0.01 per unit of risk. If you would invest  3,143,631  in Tien Giang Investment on September 16, 2024 and sell it today you would earn a total of  1,306,369  from holding Tien Giang Investment or generate 41.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Tien Giang Investment  vs.  Pha Lai Thermal

Tien Giang Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tien Giang Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Tien Giang is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pha Lai Thermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pha Lai Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Pha Lai is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tien Giang and Pha Lai

The main advantage of trading using opposite Tien Giang and Pha Lai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tien Giang position performs unexpectedly, Pha Lai can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pha Lai will offset losses from the drop in Pha Lai's long position.

The idea behind Tien Giang Investment and Pha Lai Thermal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.